Klarna Claims AI Will Replace Workday. Unlikely Scenario But Points To A New Future. E183
Sep 13, 2024
auto_awesome
Klarna plans to cut ties with major platforms like Workday to build its own AI tools, sparking debate. Many experts are skeptical, recalling past failures of companies attempting similar strategies. The discussion revisits the challenges of integrating AI into existing enterprise systems, particularly in HR tech. There’s a great emphasis on education and training in utilizing AI tools effectively. Could agentic AI represent the workforce of the future? This thought-provoking dialogue examines the implications for corporate IT infrastructures.
Klarna's attempt to build proprietary HR software from scratch raises doubts about the sustainability and effectiveness of moving away from established vendors like Workday.
The rise of agentic AI presents opportunities to enhance HR systems, yet it will not immediately replace existing solutions, indicating a gradual integration process.
Deep dives
Challenges of Building Internal HR Software
Building proprietary HR software can lead to significant challenges for companies, as highlighted by Klarna's decision to replace Workday with their own AI tools. The episode discusses the financial implications of redirecting funds from user subscriptions to support internal development, which may not focus on core business objectives. Companies like Google and GE previously attempted this approach, only to realize the complexities and upkeep required led them back to established systems like Workday. This history suggests that working with industry-proven solutions is often more efficient than trying to create a custom version.
The Role of Agentic AI in HR Systems
Agentic AI is emerging as a transformative technology that could significantly enhance the functionality and user experience of complex HR systems. It allows for more intuitive interactions, enabling employees and managers to obtain answers and execute actions without navigating cumbersome menus. Companies like SAP and ADP are already developing their AI assistants to streamline human resources processes. This evolution indicates that conversational AI could greatly simplify HR transactions, making them accessible without extensive knowledge of the backend systems.
The Future of HR Software and AI Integration
The integration of AI into HR practices is seen as a gradual process, with conventional systems expected to persist despite advancements in technology. The episode underscores that while new AI platforms are emerging, they are unlikely to entirely replace existing backend systems in the immediate future. Historical trends show that major corporations typically reassess their core systems every decade, leaving established vendors like Workday in a position of enduring relevance. This long-standing market fidelity suggests that while innovations will enhance HR applications, they will not fundamentally dismantle existing structures.
This week Klarna, a buy-now pay-later company in Sweden, announced plans to terminate its Workday and Salesforce relationships and build it themselves. A bunch of tech pundits are big fans, but I have my doubts. As you’ll hear in the podcast, many big companies (much bigger than Klarna) have tried this, only to retreat to vendor solutions. And I do question the business strategy of putting high-powered engineering talent on mature, enterprise products like HCM and CRM.
Obviously AI is getting smarter and more capable by the minute. As I explain in the podcast, there are better ways to think about this problem, and this conversation opens up the door to a big discussion about the future of enterprise apps, agentic AI, and the role of large-scale incumbent vendors in our corporate IT stacks.